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How To Spot A Debt Relief Scam

Many consumers who have found themselves swimming in debt have begun seeking help from companies presenting themselves as “debt relief” providers.  And getting and getting scammed in the end.

Unfortunately, many of these “debt relief” companies fail to fulfill their promises of “debt relief” to consumers. Many of these shady companies charge large upfront fees, or multiple hidden fees.  Often, a substantial portion of a consumer’s monthly payment goes to the company’s fees, with little to nothing offered toward reducing the consumer’s debt.

The Department of Justice Consumer Protection Branch is working to prosecute these scam artists.  The following are some pointers to help you avoid being scammed:

  • Fraudulent debt relief companies will often make claims of being able to negotiate a one-time settlement with creditors that will reduce a consumer’s principal by 50% or more.  The Consumer Federation of America, an association of non-profit consumer organizations, warns that such a promise is a virtual impossibility.
  • If you have trouble making credit card payments, immediately call the creditor to work out a payment plan.  If that is unsuccessful, a non-profit credit counseling service may be able to help you.  These services may charge a small fee, but the cost will be substantially less than using a debt relief company.
  •   Legitimate credit counseling services tailor a consolidation plan to each consumer’s individual needs.  Not a “one size fits all” plan.
  • Demand that the company disclose set-up and maintenance fees, and that these fees be set in writing.  According to the Consumer Federation of America, consumers should not pay more than $50 for the set-up fee and $25 for monthly maintenance of the account.

If you have found yourself buried in debt, don’t let yourself fall for one of the many fly-by-night scams designed to line someones else’s pocket with your hard-earned money.  Give my office a call and discuss whether Bankruptcy is right for you.  Additionally, if you are being harassed by debt collectors give my office a call to discuss if you have a case against them.  I can be reached at the Law Offices of Todd M. Friedman, (877) 449-8898.